asked the Minister for Finance the present position regarding the tax-free allowance of a person (details supplied) in County Cork; and the reason this person had to pay tax of £1,900 on his lump sum redundancy payment.
Written Answers. - Tax Free Allowance.
90.
The Revenue Commissioners have advised me that no tax was deducted from the taxpayer's lump sum redundancy payment. The £1,900 referred to was deducted by his employer in respect of contributions to the widows and orphans scheme. He is entitled to a tax deduction in respect of these contributions over a five year period.
The taxpayer's wife died on 24 August 1983. He remarried in January 1989 but was separated from his wife on 17 April 1989. As he did not notify the tax office of his first wife's death he continued to receive the married personal allowance to which he was not entitled for the period from August 1983 to January 1989. His entitlement to the married allowance again ceased in April 1989 but he continued to have the benefit of this allowance until September 1989 when his tax-free allowances were amended. When account is taken of the extra tax-free allowance due in respect of the contributions to the widows and orphans scheme the net effect of the granting of allowances to which the taxpayer was not entitled is an undercharge of £1,845.18 to April 1989. Further undercharges will arise on review of the taxpayer's position for the current year.
In view of the taxpayer's circumstances it has been decided not to collect the undercharges at present. For this reason a revised tax-free allowance certificate on a non-cumulative basis issued to the taxpayer on 4 September 1989. This certificate gives the taxpayer the benefit of a personal allowance of £2,050 and the PAYE allowance of £800 i.e. the only allowances to which the taxpayer is now entitled.